Is the world’s largest automotive market experiencing setback?

NEW DELHI —The world’s biggest car market has been experiencing a slowdown with sales dropping each year. Is the country experiencing a setback in decades? What are the reasons for the sale slump? According to the Bloomberg report total vehicle sales in China dropped by almost 12 percent in September for the third month in a row last year. The report says that the sales are likely to miss the China Association of Automobile Manufacturers’ (CAAM) forecast of a three per cent annual sales increase.

The industry that had been booming with automakers pouring billions of dollars in the past years has been struggling to find growth. Luxury cars like BMW AG and Diamler AG have been alerted to lower profits and Jaguar Land Rover was forced to shut down a factory due to the a significant decrease in the number of customers visiting showrooms.

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From year 2011 the industry has seen significant slump in the business with sales growth percentage dropping to 2 percent from 32 percent. The sale growth has been less than 10 percent ince then with a slight rise in 2016 to 13 percent. In the previous year the growth dropped to as low as 1 percent.

Experts claim the China’s economic deceleration, increasing gas prices, urban traffic congestion and rising gas prices is all contributing to the contractions that the industry is facing. Analysts opine that the impact across brands will be disproportionate and weaker brands will need to cut prices to push their sales.

Since China opened the market for foreign brands to own a shareholding of their local partnership the local market has been hit as the big brands have been making way into the market. Car dealers in the country are urging the government to propose measures to push demand and revise VAT on used cars. The US-China trade war has also had an impact on the automotive industry with tariffs reducing profits and increasing manufacturing cost

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